Can I afford it?

[nmboone]

Does anyone want to play Suze Orman's favorite game with me? I want to know if I can afford a certain apartment. To be sure, I haven't signed a lease or anything or said that I definitely would live with this roommate that wants to rent this apt. out. I am going to look at it tomorrow and I assume I will have some time afterward to decide what I want to do. I will make it easy as possible to get your suggestions.

The apartment is $450 a month. I don't know what the utilities will be. Like I said haven't looked at it but I just want to know what everyone thinks in advance.

I am a single women with no children.

Income (depends on hours, I do work full time, but I work hourly and it can range from 32 to 39 hours): 12500

Current Budget:
Cell phone: $45 (This is set in stone until Nov. 2011, probably even after then.)
Car insurance: $130 (This includes my parents' car on liability and my car with full coverage. I am going to try to get their car removed once moved out. It's a long story. My car is payed off so if I absolutely had to I could go down to )
Cable & Internet: $85 (This will most likely change once moved in because of shared expenses. I help pay this at the parent's house for now)
Student Loans: $150 (I hate this one, lol! This bill is one I'll be paying for what will seem like the rest of my life. If I ran into some really bad trouble, I could do a deferral.)
Food: I could probably do $100. I can still work on cutting out fast food and I rarely eat out at a restaurant.
Gas: This will go up since my commute will be longer. Probably around $100 to $120.

Ok so that's it! No credit card debt or anything. I am contributing the match for my profit sharing, it's $2 plus profit sharing for every $1 I put in. I would also like to save around $100 a month.

So what does everyone think? Questions are allowed as well! And play nice!

[nmboone]

I also want to add that I have an EF of $4000.

[maat55]

What exactly is your monthly income?

[FrugalDad123]

play suze orman? Sure!

Sounds fun... I'd like to play!

Here... click here to share your budget scenario with everyone on SavingAdvice in more detail. Then let's play with it and let's see what dialogue it triggers.

Peace,
FrugalDad123

[nmboone]

My income is about 1250. 1200 if my hours get cut.

[FHA Loan]

Income (depends on hours, I do work full time, but I work hourly and it can range from 32 to 39 hours): 12500

I'm guessing this means your ANNUAL income is $12,500, not your monthly income. Otherwise affording $450/month would not possibly be an issue.

Assuming your monthly income is $1040 (not sure if that is before or after) I'd say it's going to be VERY tight even if that is post-tax (net) earnings.

[terces]

Suze would shoot you down. From what I have seen on her show you better have 6-9 mths of emergency and retirement savings going. She's harsh.

[Ima saver]

What are you paying for rent now, or do you live with parents??

[nmboone]

I added an extra 0 on the first post. That would be an important thing to know right? Monthly income is 1250 a month after tax.

I am currently living with my parents. It isn't a bad situation as far as my relationship with them, but it is very cramped. Another thing I have to think about is the commute from the new place to my work. It would double from about 15 to 20 minutes to 30 to 35.

One good thing about it is I wouldn't have a lease. If something didn't work out, I could move back in with my parents. I will admit that $450 is a little more than what I would like to pay. But the place I looked at with my possible roommate today is absolutely awful and in a terrible neighborhood anyway.

Honestly the area where this girl wants to move to is way out of my way and next to a large university. So I don't know what will happen in this situation, but I would like to move out, and I really like this potential roommate.

One last thing: I wanted to pose this question. I realize that Suze could shoot me down because I don't have a huge emergency fund, but does anyone ever have 6 to 9 months EF when they are starting out after college? It's hard to say without knowing the exact amount of bills, but on $450 rent and other bills, I would say I have about 4 months.

[kork13]

As to the "No EF = No spend" idea... lunacy. That's one of those areas that Ms. Orman is off-base on, IMO. People need a place to live, you'd be getting a roommate, and you're looking in a lower price range of rents. That said, however, it is a little tight for your current income. Just with what you've provided (and assuming ~$100/mo in shared utilities), that adds up to ~$1160/mo in planned expenses. Throw in the random little expenses that always crop up, and you've got next to nothing to put into savings, nor any sort of buffer to adjust for a month of higher-than-normal expenses or lower-than-normal hours.

I'd say that you can afford it, but with very little wiggle room. Is it possible to take on a few extra hours each week, or perhaps get a small side job? What's your degree in? Are you utilizing it currently? If not, can you find a job that will (quite possibly, it would pay better). Unless you can raise your income a bit, you'll need to get creative about stretching the income you have. Best chances there might be in car insurance or dropping cable (you can watch most shows online anyway anymore). It's always worth trying to strike out on your own and gain independence from your parents, but you do just need to be careful that you're in a position to do so. I think you can do it, but you'll have to work hard for it. Viel Glück

[marvholly]

My first thought is that if you HAVE to ask the answer is already NO!!!

Furthermore, in this economy your EF is WAAAY too low. You actually need 12 months worth of avg. living expenses. I "thought" my job was secure as I was the ONLY one doing purchasing for my location. They riffed me anyway 3 weeks ago.

[flippinterp]

In my opinion, this apartment would be a stretch for you- perhaps a stretch you'd be able to make however. Is the 1200 income before or after taxes? Does the 450 in rent include utilities? Would you have to put down a security deposit? With the budget you posted (including saving 100/mo) you've got $470 in wiggle room currently. Adding in 450 in rent would leave you VERY little wiggle room. A $25 copay at the doctor's office would cause you to be over budget. Speaking of that, do you have health insurance? I didn't see that listed in your budget, but it's possible it comes out of your paycheck before taxes.

This is one of those situations where you have to figure out how to make it work if you decide to rent with your friend. Can you live and function with only $20 of wiggle room in your budget? Personally, I'm not comfortable with that little leeway, but it's your decision.

I'm also wary of you not having a lease. It sounds great, but I've had some really bad experiences with sketchy landlords where I didn't have a lease to protect me.

[MonkeyMama]

I'd say you can't afford it.

I probably paid the same rent with a little less income, in college. It is certainly DOABLE. But the only reason I did so was to get my degree and get ahead. A very short term solution. There was certainly no room for true emergency. (My budget was very similar - though certainly no $$ for cable!!)

"but does anyone ever have 6 to 9 months EF when they are starting out after college?"

Yes, certainly they can save that up very quickly. If I were you, I would stay at home and save that up. How long would it take? It seems to me you could save it up in a very short time period. LEss than a year?

When I graduated college, my income went from about $10k to $30k. Plus I no longer had to pay tuition. HUGE windfall. I saved the difference for about 6 months before buying a home with my spouse. Most people's gut reaction is "ugh" when I say that I kept living on $10k per year after college. BUT, I had fewer expenses (no tuition) and I had something I never had in college - cash in the bank! If I did it 6 months, 1 year, or 2 years, it would have been well worth it. Like my college situation, I definitely would not want to live like that forever. But in the grand scheme of things it was a very small sacrifice. (Looking back, a decade later?)

You are blessed to be able to live at home and save up the money. I say - take advantage and save for that rainy day. I'd say that a better rental opportunity will come along eventually. Seems like you have a lot of misgivings about this one.

[disneysteve]

I disagree that Suze would deny you based on the lack of EF. She applies that more so to people who want to buy something or take a trip or some other non-necessity. Housing is a different story.

That said, I still think she would deny you, just for a different reason. $450/month with a base income of $1,200/month is already 37.5% of your income and that doesn't include utilities which will probably push you up near 40% of income going to housing. That is too much. Find a cheaper place or a place where you will share with more than one roommate to reduce your share.

[TrunkMonkey]

Are you planning on getting a higher paying job, do you need to save for anything?

I think you can afford it you just won't have any savings. And what other options do you have, you could move in with somebody but would 450$ per month vs. saving 5K per year matter that much?

I think I would just spend the 450$ and live in the apartment, but it depends on your overall financial plan. If your young, you should live on your own its not worth it to live at home.

If you only make 12K it is pretty tough to survive, I would look for higher paying employment.

8hr/day * 21 days = 168 hours is about 7.5$ per hour